The downside to all of this, is that your finances may not last the course, so if you are drawing up a plan to see you through to your late 90’s - here are some practical steps to consider.
- Don’t leave it to chance – the State Benefit system has come under more intense scrutiny during the Coronavirus pandemic, highlighting some of the most serious gaps. So, don’t assume that someone else might take care of you and your family because even if they did, it is unlikely that it will be enough.
So, don’t assume that someone else might take care of you and your family because even if they did, it is unlikely that it will be enough.
- Be flexible – your plans must be able to cope with unexpected changes; we’ve all experienced a few of those over the last few weeks, and months, and having a flexible plan which is reviewed regularly, will allow you to accommodate for those unforeseen circumstances.
- Plan for emergencies – it is always wise to have a slush fund to fall back on. Typically, this should be at least 3 months’ worth of income to allow you time to decide on the most appropriate course of action, depending of course, on the nature of the emergency.
- Protect yourself and those around you* – the family income is what makes the world turn and yet many of us choose not to protect it. We are often quite happy to insure our cars, our homes, and even our pets, but we very rarely take care of the one thing that provides all of this – your income.
Whilst many employed individuals’ might benefit from their employer covering them for typically between 6 and 12 months, if you are self-employed, it is a different story altogether. The average period of an ‘income protection’ claim is in excess of 5 years’.
So ask yourself, are you sufficiently protected?
- Start saving early – the longer your money is invested the more it could be worth. Retirement could seem a long way off for some, but money put aside now could make a huge difference to your financial wellbeing in later life.
Are you saving enough for later on in life?
- Know what you have – keep track of your finances to ensure that you are making the most of the opportunities available to you, such as the valuable tax benefits associated with saving into pensions and/or Individual Savings Accounts (ISA’s).
When was the last time you sat down and took stock of what you have?
- Respond to changes – if you get a pay-rise for example, why not start or increase the amount of money you are putting away. This will help your savings keep pace with your income, as well as inflation.
- Regularly review your essential bills and spending – if you are able to enjoy a healthier and more active later life, you may need more funds for leisure activities or holidays. Judicious cash flow planning can help you gauge how much you may need to save for any given stage.
- Consider alternatives** – whilst your traditional deposit account might be a good home for short-term savings, interest rates remain historically low (the average rate on an instant access account can be as little as 0.1% p.a.) and there are no signs of them changing. If you are happy to consider saving/investing for the medium to longer-term, you should always consider the alternatives. The good news is, that it is not just about investing in stocks and shares.
One lesson we can learn from Captain Tom is that there’ is always scope for something new so, if you do not have a financial plan already, or have one but have not reviewed it recently, it is never too late.
*Source of data Aviva Plc
**past performance is not a reliable indicator of future performance and your investments could rise and fall in value